Wednesday, September 25, 2013 12:00 AM

OCC - Updated CREL Manual...New Environmental Requirements

By: Joe Berlin, PE, CP and Judd Olson, EP
Tags: None

Environmental Risk Management More Prominent

In August 2013, the OCC issued a revised “Commercial Real Estate Lending” (CREL) Handbook booklet replacing prior versions.  The CREL vastly expands prior guidance, including reference to integration of an effective environmental risk management (ERM) program with appraisals.

Some interesting aspects of applicability of the regulation:

·        Loans guaranteed or insured by the federal government, its agencies or backed by the full faith and credit of a state government are exempt from the rule provided that the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the applicable LTV limit.

·        A bank’s real estate lending policies should be appropriate for the bank’s size, the nature and scope of its operations, and should reflect the level of risk that is acceptable to its board of directors. The board of directors must review and approve the bank’s real estate lending policy at least annually.

·        A bank’s loan policy should establish a program for assessing the potential adverse effect of environmental contamination and ensure appropriate controls to limit the bank’s exposure to environmental liability associated with real estate taken as collateral.

·        The CREL recommends use of AAI-compliant investigation in foreclosure.

·        The ERM program should reflect the level and nature of the bank’s real estate lending activities, its risk profile, and consideration of applicable environmental laws.

·        An annual review and approval by the bank’s board of directors or designated committee.

There is a great more detail to discuss which will be covered in future pieces.


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